Coleman's blueprint for living well

WOODSIDE Petroleum managing director Peter Coleman says the future of the industry is at stake as explorers are being hit in the crossfire of the war between industry, government and activists, and has spelled out his own blueprint to address the “trust deficit” and get the public back on side.

Related Content

Topics(Select for more information):

Bemoaning the "regrettable" situation where Australian energy security is in doubt, manufacturers are panicking and the oil and gas industry is being blamed as one of the primary causes, Coleman told APPEA 2017 in Perth yesterday that his own sector was not devoid of blame.

He condemned "tribal" behaviours that had left it vulnerable to "populist campaigns".

He said that while the Australian Taxation Office "has enough tools" to do its job, as evidenced by its successful pursuit of Chevron Corporation over intra-company loans, people will naturally look for ways to extract more from the sector if it is not seen as doing things responsibly, both environmentally and financially.

He said exploration and drilling bans across the Northern Territory, New South Wales and Victoria were a product of a "trust deficit" that has emerged between industry and the broader community, with the imbalance between LNG exports and domestic gas only heightening tensions.

"Don't expect taxpayers to carry us for our poor investments. We need to be accountable for our decisions," he told Energy News on the sidelines of APPEA 2017 in Perth yesterday.

Blueprint for recovered trust

He said the first step to regain that trust is for the Australian Petroleum Production and Exploration Association to consult and agree on a code of conduct for land access and use that recognises and assuages landowners' concerns.

"We need to commit to a clear set of principles and processes to enable us to work with landowners and affected communities. Similar codes exist elsewhere in the world," he said, adding that industry boasting about being the world's biggest LNG exporter "rings hollow" if domestic needs can't be met," he said.

"To put it bluntly, we need to ensure some of the resources we develop are available for Australian consumers, and available at a price that is sustainable for both the customer and the producer.

"Markets can work freely with little government supervision when they are deep and liquid with multiple players able to take on risks, both short and long-term.

"It is clear that gas markets, left to their own devices, do not always ensure domestic supplies, particularly when the market is small. It is also clear that this is unacceptable to the community."

He also told Energy News that the Browse joint venture's decision to develop that project by tying it back into the existing North West Shelf - while it still needs to compete with other gas sources such as Scarborough and Greater Gorgon- was one way of assuaging concerns about domestic gas.

He said that until APPEA and its members come up with a solution to engaging better with the community, the Commonwealth, devoid of a long-term solution, will only continue to use "blunt instruments" such as the proposed gas exports restrictions in response to short-term pressures.

Yet Coleman also warned that, while the arguments for the Australian Domestic Gas Security Mechanism were "understandable", it was not likely to be a successful long-term solution and could actually inhibit additional development of domestic supply in the long run.

Change the conversation

With the west-to-east pipeline an unviable short-term fix and gas swaps a mere "band-aid" solution, APPEA needed to "change the conversation" and Coleman proposed something quite contrarian given recent industry rhetoric: "Be guided by the needs of the community."

He said it was not clear that customers existed to underwrite the west-east trans-national pipeline, which he has previously said could take up to 10 years to build.

"We need a more mature approach to setting policy frameworks for engagement," he said.

"Our industry was confronted in the past year by a perfect storm as the angst over east coast gas supplies compounded public concern at a decline in tax revenues due to low prices."

Global economics worsened the case for Australia's oilers not only because low oil prices hit their bottom lines, but reduced government revenue and fuelled community resentment.

"In both debates - about taxation and energy security - it is important to remember that resource developers draw on a social licence to operate that imposes certain obligations," he said.

"The resources are owned by the people, who allow us to develop them but expect a return. We should not expect the public purse to subsidise flawed decision-making that ignores the cyclical nature of the commodity cycle."